What so much FEAR about LOW VIX readings???
Let's be objective here:
Low VIX, or volatility, is not a sign in itself of immediate bear markets. Let's look at the last 10+ years of VIX data to find patterns that would suggest trouble ahead.
What we see instead is that the last two periods of extended LOW VOLATILITY READINGS were during choppy to rising periods of the stock market.
No market runs on just one indicator and VIX is just one tool amongst many.
What I see is going on is that people are selling call options to generate income and to cut back a little bit of risk. This is a sign that people are nervous, not bullish. When people are extremely bullish, they "buy calls" and they "sell puts". But they are selling calls and buying puts, which is the opposite of bearish.
Tim
9:30AM EST January 30, 2017
Low VIX, or volatility, is not a sign in itself of immediate bear markets. Let's look at the last 10+ years of VIX data to find patterns that would suggest trouble ahead.
What we see instead is that the last two periods of extended LOW VOLATILITY READINGS were during choppy to rising periods of the stock market.
No market runs on just one indicator and VIX is just one tool amongst many.
What I see is going on is that people are selling call options to generate income and to cut back a little bit of risk. This is a sign that people are nervous, not bullish. When people are extremely bullish, they "buy calls" and they "sell puts". But they are selling calls and buying puts, which is the opposite of bearish.
Tim
9:30AM EST January 30, 2017
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Tim.
Nov 9, 2018. 12:03AM EST